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Harvesting the Magic Money Tree
Investment Solutions - Chief Investment Officer

Dear Investors,

As we begin a new decade, we examine the debate around a monetary theory that is generating much interest in this US election year.


Key takeaways:

  • Modern Monetary Theory says that a government that prints its own currency cannot default
  • MMT argues that government spending is only problematic if it triggers inflation and politics should focus on resource availability, not projects’ costs
  • MMT questions monetary policy’s focus on targeting inflation
  • The theory does not offer a policy framework and does not identify when inflation threatens and hands monetary policy to politicians’ spending pledges
  • MMT does offer a useful reminder that we should question the past decade’s unconventional monetary tools.


Best regards,


Stéphane Monier
Chief Investment Officer, Lombard Odier Private Bank

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